ACTELIS NETWORKS INC
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
ASNS$0.080.0%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-14.
0001213900-24-043030
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001213900-24-069173
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 42 previous paragraphs and 64 current paragraphs.
24 unchanged; 13 reworded; 27 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (27)
Current report
The table below provides our results of operations for the periods indicated.
Current report
Our revenues for the six months ended June 30, 2024, amounted to $4.16 million, compared to $3.74 million for the six months ended June 30, 2023. The increase from the corresponding period was primarily attributable to an increase of $2.05 million in revenues generated from North America, offset by a decrease of $1.64 million in revenues generated from Europe, the Middle East and Africa and Asia Pacific.
Current report
Our cost of revenues for the three months ended June 30, 2024, amounted to $1.5 million, compared to $1.3 million for the three months ended June 30, 2023. The cost of revenues for the recent period was primarily attributable to the change in regional mix of revenue, of an increase in North America revenues which are more profitable, and a decrease in Europe, Middle East and Africa revenues which are less profitable.
Current report
Our cost of revenues for the six months ended June 30, 2024 amounted to $2.0 million, compared to $2.4 million for the six months ended June 30, 2023. The decrease from the corresponding period was primarily attributable to the change in regional mix of revenue of an increase in North America revenues, which are more profitable, and a decrease in Europe, Middle East and Africa revenues which are less profitable.
Current report
Our research and development expenses for the six months ended June 30, 2024, amounted to $1.25 million compared to $1.4 million for the six months ended June 30, 2023. The decrease is primarily attributable to cost reduction measures taken.
Current report
Our sales and marketing expenses for the six months ended June 30, 2024, amounted to $1.3 compared to $1.6 million for the six months ended June 30, 2023. The decrease was mainly due to cost reduction measures taken.
Current report
Our general and administrative expenses for the six months ended June 30, 2024, amounted to $1.6 million compared to $1.8 million for the six months ended June 30, 2023. This decrease was mainly due to cost reduction measures taken.
Current report
Other Income
Current report
Our Other Income for the three and six months ended June 30, 2024 amounted to $163,000 vs, $0 in the three and six months ended June 30, 2023. The increase is driven by a government grant from the State of Israel associated with the Swords of Iron war.
Current report
Operating profit (Loss)
Current report
Our operating profit for the three months ended June 30, 2024, was $66,000, compared to an operating loss of $1.7 million for the three months ended June 30, 2023. The increase was mainly due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses.
Current report
Our financial expense, net for the six months ended June 30, 2024 was $0.26 million (including $0.3 million interest expenses) compared to financial income, net of $0.1 million (including $0.3 million interest expenses) for the six months ended June 30, 2023. The increase is mainly due to financial income in the prior year from bank deposits and exchange rate differences not repeated in current period.
Current report
Our net loss for the three months ended June 30, 2024, was $78,000, compared to net loss of $1.6 million for the three months ended June 30, 2023. The increase was primarily due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses, partially offset by financial income in the prior year not repeating itself.
Current report
Our net loss for the six months ended June 30, 2024, was $2.06 million, compared to net loss of $3.5 million for the six months ended June 30, 2023. This decrease was primarily due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses, partially offset by financial income in the prior year not repeating itself.
Current report
Non-GAAP adjusted EBITDA
Current report
June 2024 Warrant Inducement
Current report
On June 5, 2024, we entered into an inducement agreement with a certain holder of certain of our existing warrants to purchase up to an aggregate of 999,670 shares of our common stock originally issued on May 8, 2023, with a five and one-half year term, at an exercise price of $2.75 per share (the “May 2023 Warrants”).
Current report
Pursuant to the inducement agreement, the holder agreed to exercise for cash its May 2023 Warrants to purchase an aggregate of 999,670 shares of our common stock at an exercise price of $2.75 per share, in consideration of our agreement to issue new common stock purchase warrants (the “June 2024 Warrants”), as described below, to purchase up to an aggregate of 1,999,340 shares of our common stock, at an exercise price of $2.00 per share.
Current report
H.C. Wainwright & Co., LLC (the “Placement Agent”) acted as our exclusive placement agent in connection with the June 2024 Warrant Inducement. In connection with the June 2024 Warrant Inducement, we issued to certain designees of the Placement Agent warrants (the “June 2024 Placement Agent Warrants”) to purchase up to 69,977 shares of common stock (representing 7.0% of the Existing Warrants being exercised), which have the same terms as the June 2024 Warrants, except that the Placement Agent Warrants have an exercise price equal to $3.4375 per share (125% of the exercise price of the May 2023 Warrants). The June 2024 Warrants were immediately exercisable from the date of issuance, until five and one-half year anniversary of such date for 999,670 of the June 2024 Warrants, and until twenty four months anniversary of such date for the remaining 999,670 of the June 2024 Warrants. The Placement Agent Warrants are immediately exercisable from the date of issuance, until the five and one-half year anniversary of such date. The closing of the June 2024 Warrant Inducement occurred on June 6, 2024.
Current report
July 2024 Warrant Inducement
Current report
On June 30, 2024, we entered into an inducement letter with a holder of our June 2024 Warrants, to purchase up to an aggregate of 999,670 shares of the June 2024 Warrants, originally issued on June 6, 2024, with a twenty-four month term, at an exercise price of $2.00 per share (the “June 30, 2024 Inducement Letter Agreement”).
Current report
Pursuant to the inducement letter, the holder agreed to exercise for cash its warrants to purchase an aggregate of 999,670 shares of our common stock at an exercise price of $2.00 per share, in consideration of our agreement to issue new common stock purchase warrants (the “July 2024 Warrants”), as descried below, to purchase up to an aggregate of 1,999,340 shares of our common stock, at an exercise price of $1.75 per share.
Current report
We engaged the Placement Agent to act as our exclusive placement agent in connection with the July 2024 Warrant Inducement. In connection with the July 2024 Warrant Inducement, weissued to certain designees of the Placement Agent warrants (the “July 2024 Placement Agent Warrants”) to purchase up to 69,977 shares of common stock (representing 7.0% of the Existing Warrants being exercised), which have the same terms as the July 2024 Warrants, except that the Placement Agent Warrants have an exercise price equal to $2.50 per share (125% of the exercise price of the June 2024 Warrants). The July 2024 Warrants were immediately exercisable from the date of issuance, until twenty four months anniversary of such date. The July 2024 Placement Agent Warrants are immediately exercisable from the date of issuance, until the five and one-half year anniversary of such date. The closing of the July 2024 Warrant Inducement occurred on July 2, 2024.
Current report
QIND Term Sheet
Current report
On May 23, 2024, we entered into a binding term sheet (the “Term Sheet”) with Quality Industrial Corp, a Nevada corporation traded on the OTC under the symbol QIND (“Target”), and Ilustrato Pictures International Inc., a Nevada corporation (“Seller”), pursuant to which we will acquire from Seller and additional shareholders of Target shares of Target constituting between 61% to 75% of the issued and outstanding shares of the Target’s share capital. We originally intended to close the transaction, pending regulatory requirements and due diligence, within 60 days. However, on July 19, 2024, we, Target and Seller agreed to extend the non-solicitation and no-shop periods provided in the Term Sheet until August 2, 2024, unless mutually terminated earlier by the parties.
Current report
On August 2, 2024, we, Target and Seller agreed to further extend the non-solicitation and no-shop periods provided in the Term Sheet until August 16, 2024, unless mutually terminated earlier by the parties.
Current report
Net cash provided by financing activities was $3,000 for the six months ended June 30, 2024, compared to $2.8 million provided for the six months ended June 30, 2023. The cash flow from financing activities for the six months ended June 30, 2024, resulted from exercise of investor warrants, offset by repayments of a long-term loan. The decrease is related to the repayment of long-term loan, offset by funds raised from an investor warrant exercise. See notes 2 to the condensed consolidated financial statements.
Removed paragraphs (5)
Previous report
Our cost of revenues for the three months ended March 31, 2024, amounted to $506,000 compared to approximately $1.2 million for the three months ended March 31, 2023. The decrease from the corresponding period was mainly due to the decrease in revenues, partially offset by the higher effect of fixed costs as a higher percent of the lower revenues.
Previous report
Operating Loss
Previous report
Our net loss for the three months ended March 31, 2024 was approximately $2.0 million, compared to net loss of approximately $1.9 million for the three months ended March 31, 2023.
Previous report
Non-GAAP Financial Measures
Previous report
Net cash used in financing activities was $164,000 for the three months ended March 31, 2024, compared to Net cash used in financing activities $242,000 for the three months ended March 31, 2023.
Reworded paragraphs (13)
Previous wording
References in this report to “we,” “Actelis,” “us,” “our,” or the “Company” refer to Actelis Networks, Inc. and its wholly owned subsidiary. References to our “management” or our “management team” refer to our officers and directors. You should read the following discussion of our historical performance, financial condition and future prospects in conjunction with the management’s discussion and analysis of financial conditions and results of operations and the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 26, 2024 (referred to herein as the “Annual Report”). The following discussion and analysis of our financial condition and results of operations should also be read in conjunction with the condensed consolidated financial statements (including the notes thereto) contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risk and uncertainties. For further information on items that could impact our future operating performance or financial condition, see the sections titled “Risk Factors” included in the Annual Report, as updated in Part II, Item 1A below, and the Special Note Regarding Forward Looking Statements above.
Current wording
References in this report to “we,” “Actelis,” “us,” “our,” or the “Company” refer to Actelis Networks, Inc. and its wholly owned subsidiary. References to our “management” or our “management team” refer to our officers and directors. You should read the following discussion of our historical performance, financial condition and future prospects in conjunction with the management’s discussion and analysis of financial conditions and results of operations and the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 26, 2024 (referred to herein as the “Annual Report”). The following discussion and analysis of our financial condition and results of operations should also be read in conjunction with the condensed consolidated financial statements (including the notes thereto) contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risk and uncertainties. For further information on items that could impact our future operating performance or financial condition, see the sections titled “Risk Factors” included in the Annual Report, and the Special Note Regarding Forward Looking Statements above.
Previous wording
Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023
Current wording
Three and Six Months Ended June 30, 2024, Compared to Three and Six Months Ended June 30, 2023
Previous wording
Our revenues for the three months ended March 31, 2024 amounted to $726,000, compared to $1.8 million for the three months ended March 31, 2023. The decrease from the corresponding period was primarily attributable to a decrease of $236,000 of revenues generated from North America, a decrease of $636,000 of revenues generated from Europe the Middle East and Africa as a major project phase completed in the three months ended March 31, 2023, and a decrease of $250,000 of revenues generated from Asia Pacific.
Current wording
Our revenues for the three months ended June 30, 2024 amounted to $3.4 million, compared to $1.9 million for the three months ended June 30, 2023. The increase from the corresponding period was primarily attributable to an increase of $2.3 million of revenues generated from increased volume in North America, offset by a decrease of $0.8 million in revenues generated from Europe, the Middle East and Africa.
Previous wording
Our research and development expenses for the three months ended March 31, 2024 amounted to $647,000 compared to $757,000 for the three months ended March 31, 2023. The decrease is mainly due to a decrease in payroll expenses.
Current wording
Our research and development expenses for the three months ended June 30, 2024, amounted to $0.6 million compared to $0.7 million for the three months ended June 30, 2023. The decrease is primarily attributable to cost reduction measures taken.
Previous wording
Our sales and marketing expenses for the three months ended March 31, 2024 amounted to $627,000 compared to $929,000 for the three months ended March 31, 2023. The decrease was mainly due to a decrease in commission expenses as a result of the decrease in revenues primarily driven by the project phase completion in Europe, and a decrease in payroll associated with the Company’s cost reduction measures.
Current wording
Our sales and marketing expenses for the three months ended June 30, 2024, amounted to $0.65 million compared to $0.7 million for the three months ended June 30, 2023. The decrease was mainly due to cost reduction measures taken, offset partially by increase in commission expense driven by the increase in revenues.
Previous wording
Our general and administrative expenses for the three months ended March 31, 2024 amounted to $817,000 compared to $865,000 for the three months ended March 31, 2023.
Current wording
Our general and administrative expenses for the three months ended June 30, 2024 amounted to $0.79 million compared to $0.97 million for the three months ended June 30, 2023. The decrease is driven by cost reduction measures taken.
Previous wording
Our operating loss for the three months ended March 31, 2024, was approximately $1.87 million, compared to an operating loss of approximately $1.86 million for the three months ended March 31, 2023.
Current wording
Our operating loss for the six months ended June 30, 2024, was $1.8 million, compared to an operating loss of $3.6 million for the six months ended June 30, 2023. The decrease was mainly due to the increase in revenues, improved gross margin due to regional revenue mix, and cost reduction measures taken, reducing operating expenses.
Previous wording
Our financial income, net for the three months ended March 31, 2024, was $115,000 (including $207,000 interest expenses) compared to $32,000 of financial expense, net (including $180,000 interest expenses) for the three months ended March 31, 2023. The increase is mainly due to a decrease in income from exchange rate differences.
Current wording
Our financial expense, net for the three months ended June 30, 2024 was net of $0.1 million (including $0.1 million interest expenses) compared to financial income, net of $0.1 million (including $0.2 million interest expenses) for the three months ended June 30, 2023. The increase is mainly due to financial income in the prior year from bank deposits and exchange rate differences not repeated in current period.
Previous wording
As discussed in Note 1(b) to the condensed consolidated financial statements appearing elsewhere in this Quarterly report on Form 10-Q, we have incurred significant losses and negative cash flows from operations and incurred losses of approximately $2.0 million and approximately $1.9 million for the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024 and 2023, we had negative cash flows from operations of $203,000 and $1.7 million, respectively.
Current wording
As discussed in Note 1(b) to the condensed consolidated financial statements appearing elsewhere in this Quarterly report on Form 10-Q, we have incurred significant losses and negative cash flows from operations and incurred losses of approximately $1.94 million and approximately $3.5 million for the six months ended June 30, 2024 and 2023, respectively. During the six months ended June 30, 2024 and 2023, we had negative cash flows from operations of $2.3 million and $2.9 million, respectively.
Previous wording
As of March 31, 2024, we had an accumulated deficit of $41.7 million, cash on hand (including short term deposits and restricted cash equivalents) of $2.8 million, and long-term restricted cash and cash equivalents and restricted bank deposits of $2.6 million. We monitor our cash flow projections on a current basis and take active measures to obtain the funding we require to continue our operations. However, these cash flow projections are subject to various uncertainties concerning their fulfillment, such as the ability to increase revenues due to lack of customers or decrease cost structure. Our transition to profitable operations is dependent on generating a level of revenue adequate to support our cost structure through growth of existing and new customers.
Current wording
As of June 30, 2024, we had an accumulated deficit of $41.75 million, cash on hand (including short term deposits and restricted cash equivalents) of $3.1 million, and long-term restricted cash and cash equivalents and restricted bank deposits of $0.3 million. We monitor our cash flow projections on a current basis and take active measures to obtain the funding we require to continue our operations. However, these cash flow projections are subject to various uncertainties concerning their fulfillment, such as the ability to increase revenues due to lack of customers or decrease cost structure. Our transition to profitable operations is dependent on generating a level of revenue adequate to support our cost structure through growth of existing and new customers.
Previous wording
As of March 31, 2024, we had cash, cash equivalents, and restricted cash and cash equivalents of approximately $5.1 million compared to approximately $5.5 million of cash, cash equivalents and restricted cash as of December 31, 2023.
Current wording
As of June 30, 2024, we had cash, cash equivalents, and restricted cash of $3.3 million compared to $4.8 million of cash, cash equivalents and restricted cash as of June 30, 2023.
Previous wording
Cash used in operating activities amounted to $205,000 for the three months ended March 31, 2024, compared to approximately $1.7 million for the three months ended March 31, 2023. The decrease in cash used in operating activities was mainly due to an increase in advances from customers and accounts payable, which were partially offset by a lower decrease in accounts receivables.
Current wording
Cash used in operating activities amounted to $2.3 million for the six months ended June 30, 2024, compared to $2.9 million for the six months ended June 30, 2023. The decrease in cash used in operating activities was mainly due to cost reduction measures taken.
Previous wording
Net cash used in investing activities was $1,000 for the three months ended March 31, 2024, compared to cash used in investing activities of $334,000 for the three months ended March 31, 2023. The decrease from the corresponding period was mainly due to the increase in short term deposits and restricted bank deposits in the three months ended March 31, 2023.
Current wording
Net cash provided by investing activities was $0.2 million for the six months ended June 30, 2024, compared to cash provided by investing activities of $0.7 million for the six months ended June 30, 2023. The decrease from the corresponding period was mainly due to the reduction in short-term bank deposits.